(Updates with Horton’s terms in fourth paragraph.)
Feb. 13 (Bloomberg) -- The board of bankrupt American Airlines parent AMR Corp. is meeting now to vote on an $11 billion merger with US Airways Group Inc. after the two sides reached a tentative agreement that would create the world’s largest carrier, people familiar with the matter said.
The accord probably will go to US Airways’ board later today once AMR directors decide, said the people, who asked not to be identified because the talks are private. Board approval would pave the way for an announcement tomorrow, people familiar with the matter have said.
While the final terms weren’t immediately available, the companies had agreed that AMR creditors would own 72 percent of the new carrier and that US Airways stockholders would get 28 percent, people familiar with the matter have said. US Airways Chief Executive Officer Doug Parker will be CEO, and AMR CEO Tom Horton will be non-executive chairman, the people have said.
Horton will receive a performance payment for taking AMR through bankruptcy, with the amount set by the company’s creditors committee, a person familiar with that issue said today. His tenure will run until the first joint shareholder meeting or for one year from the closing date, the person said.
Parker has said the combined airline will retain the American name and its headquarters in Fort Worth, Texas.
Mike Trevino, a spokesman for AMR, said he had no immediate comment about the status of a merger agreement. Todd Lehmacher, a spokesman for Tempe, Arizona-based US Airways, also declined to comment.
US Airways rose 2.7 percent to $14.66 at the close in New York. The shares have more than tripled since Nov. 28, 2011, the day before AMR filed for bankruptcy.
AMR’s $460 million of 6.25 percent convertible notes due in October 2014 rose 0.4 percent to 101 cents on the dollar at 3:55 p.m. in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The debt has risen more than fivefold since AMR’s Chapter 11 filing.
--Editors: Ed Dufner, James Langford